Apple drops bomb on investors - no more data on how many iPhones it sells

Apple drops bomb on investors - no more data on how many iPhones it sells
PHOTO: AFP

SAN FRANCISCO - First Apple took away the headphone jack on its iPhones. Then it took away the home button.

And now, it has taken away a closely watched performance metric that it has disclosed to investors for 20 years.

Apple on Thursday (Nov 1) said that it will stop reporting unit sales data for its iPhone, iPad and Mac computer products, the latter of which it has given out since 1998. Analysts and investors use the figures to calculate the average selling price of Apple's devices and gauge the health of the company.

Apple said the data is less relevant to the strength of its business as customers bundle products, such as an iPhone paired with its wireless AirPods headphones, along with paid subscription services like Apple Music to listen to songs and iCloud storage for photos. Analysts were sceptical.

"Companies typically stop reporting metrics when the metrics are about to turn. This is not a good look for Apple," said analyst Walter Piecyk from BTIG Research.

The move cost Apple dearly, helping to send shares down about 7 per cent in after-hours trading. They later settled at US$207.81 (S$281), about 6.5 per cent below their previous close.

"Apple is a complex company with lot of moving parts," said analyst Ivan Fienseth from Tigress "I think they need to give more transparency to their shareholders and not less."

First look at Apple iPhone Xr, Xs, Xs Max

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    The new iPhone Xs, Xs Max and Xr all feature full-screen design without the home button that has been a feature since the first iPhone launched 11 years ago.

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    Instead, all the new iPhones will use only face recognition technology, or Face ID, for user authentication.

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    It is a bold move by Apple, considering many iPhone users are still very used to the touch button, or Touch ID’s fingerprint authentication.

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    The new iPhone Xs is the direct successor to last year’s iPhone X, sporting the same 5.8-inch Oled screen but with updated and faster A12 Bionic processor,

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    better water resistance, all-new image sensor of rear dual-camera system, improved TrueDepth camera system for advanced Face ID among the improvements.

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    Catering to users who want bigger screens, Apple also launched the iPhone Xs Max with the similar specifications as the iPhone Xs, but with a bigger 6.5-inch Oled screen.

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    Both iPhone Xs and Xs Max will be available in silver, black and a new colour option - gold.

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    However, Apple has not forgotten the budget market with the iPhone Xr.

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    It features the same design and processor as the iPhone Xs and iPhone Xs Max, but comes with a cheaper 6.1-inch LCD screen that has less contrast and dynamic range as well as less power efficient compared to Oled screens.

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    The cheaper iPhone Xr only has a single rear camera, unlike the rear dual-camera system of iPhone XS and XS Max.

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    However, it comes in more colours including red, blue, yellow, black and white.

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    Apple also introduced a fourth generation of the Apple Watch with a major redesign -- and a series of features designed to improve its performance as a medical and health device.

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    The smartwatches are able to detect hard falls, and an electrical heart rate sensor can take an electrocardiogram.

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    Apple stressed its devotion to data privacy, saying all health information gathered is encrypted on the smartwatch to be shared only as users see fit.

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    The new Apple Watch Series 4

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Apple said it expects between US$89 billion and US$93 billion in revenue for its fiscal first quarter ending in December.

But now, Apple will give cost-of-sales data for both its total product businesses and its total services business, which will let investors evaluate a gross margin for both. In the past, Apple gave only an overall gross margin figure for the company.

The new numbers are important for two reasons. First, they will show just how lucrative Apple's hardware business really is. But more importantly, for the first time they give margin information on Apple's services business, which reached US$10 billion in its fiscal fourth quarter, up 17 per cent.

Many of Apple's fastest-growing businesses are subscription based, like its US$9.99 a month Apple Music service. And investors tend to value subscription business through a combination of their revenue growth rate and margins - information that Apple investors will now have, said Tien Tzuo, chief executive of Zuora Inc, a company that helps subscription businesses track their finances.

But one problem Apple investors will face is not knowing what the margin mix is within the services business. Some parts of it, like iCloud storage, are likely lucrative, but others, like Apple Music, are probably less so because Apple has to pay music licenses costs and competes with rival Spotify Technology SA.

"You would value the music business with one (revenue) multiple closer to Spotify, and the cloud business with a (subscription software) multiple," said Mr Tzuo. "Having some sense of which business is growing faster would be nice."

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